Bunge Says Crop Rally From Iran War Is Spurring Farm Sales

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(Bloomberg) — Bunge Global SA said the conflict in the Middle East is lifting crop prices for US farmers even as it causes upheaval to global trade flows, including oil and fertilizer.

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The attacks on Iran by the US and Israel have already choked off the Strait of Hormuz, a strategic waterway for energy and agricultural commodities. That has caused fertilizer and fuel prices to surge, adding pressure on farmers already struggling with a weak agricultural economy and tariffs that have crimped access to key markets like China.

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But the Middle East conflict has also sent grain and oilseed prices up, prompting growers in North and South America to sell crops they’ve been holding.

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“They got the opportunity to sell because prices went up, and we got the opportunity to own more inventory,” Bunge Chief Executive Officer Greg Heckman said in an interview with Bloomberg News following the crop trader’s investor day on Tuesday.

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That business may help blunt some of the pain farmers feel if critical inputs like fertilizer and diesel remain at elevated prices because of a drawn-out conflict in the Middle East.

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“We’re hearing from our customers in the trade that inventories are OK at this point, but people are concerned if this would carry on a long time,” Heckman said. “Then they begin to be concerned about levels of physical supply and ultimately price.”

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The CEO said during Bunge’s investor day that the company is now better able to navigate volatile trade environments as a result of its merger with Viterra, which closed in July.

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“We’re stronger, we’re more agile and we’re better positioned than at any point in our 200 year history,” Heckman told attendees. “We can adapt quickly to whatever scenario, whether that’s continued deglobalization that we’re experiencing now or a return to the globalization that we enjoyed for over two decades.”

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With the turmoil in the Middle East, Bunge said it is leaning on the same strategies it has employed during Russia’s war with Ukraine — from shifting which ports it moves products through to transporting more using trucks and rail.

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“You start rerouting logistics,” Heckman said in the interview. The company did the same, he added, when China stopped buying US soybeans last year as it sought leverage in trade talks with the Trump administration. 

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“Remember, China didn’t stop buying — they stopped buying US,” Heckman said. The Asian nation pivoted to Brazilian beans, forcing Brazil’s other customers to look elsewhere — allowing Bunge to sell US supplies to those markets. “So it becomes that re-pairing of origins and destinations to get the most optimal outcome.”

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Meanwhile, the CEO said Bunge is still hopeful that the US will soon finalize its biofuels policy, which is expected to boost demand for the oilseeds that Bunge and its competitors process for renewable fuels and other products.

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Heckman said Bunge has been working with trade associations and policymakers to help shape biofuels policy not only in the US but also in countries like Brazil “so that we can help them get the ultimate outcome with the fewest unintended consequences.”

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“We’ll tell you how the markets work, how they’re going to react,” he said. “It’s our job to be the voice of reason.”

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